Limits of GST Exemption on Maintenance Charges charged by RWA
Contributed by: CS Payal Kataria
Are you living in housing Society or Residential Complex? Still struggling to know GST exemption available on maintenance/ subscription/contribution charges charged by Residential Welfare Association (RWA)? Relaxed!!! To clarify these confusions, Circular No.109/28/2019- GST dated 22/07/2019 has been issued by CBIC.
Let’s understand the matter and remove all ambiguities.
Para (1).Exemptions from GST on Maintenance Charges
With effect from 25th January 2018, the exemption from GST on maintenance charges charged by RWA from residents is available only if such charges do not exceed Rs. 7500/- per month per member. In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. For example, if the maintenance charges are Rs. 10,000/- per month per member, GST @18% shall be payable on the entire amount of Rs. 10,000/- and not on [Rs. 10,000 – Rs. 7500] = Rs. 2500/- . Prior to 25th January 2018, the exemption was available if the maintenance charges did not exceed Rs 5000/- per month per member.
Para (2) GST Registration by RWA
RWA must be unincorporated body or non- profit entity registered under any Law. If the aggregate turnover of RWA does not exceed Rs.20 Lakh in a financial year, it is not required to take GST registration even if amount of maintenance charges exceeds Rs 7500 per month per member. Therefore RWA is required to pay GST on monthly maintenance charges only subscription amount exceeds Rs7500/- and aggregate annual turnover also exceed Rs 20 lakh.
Example : Aggregate Annual Turnover of RWWA is Rs 18 Lakh and Monthly maintenance charges Rs 10,000 per month per member. In this scenario, there is not any requirement to take GST Registration by RWA and it will not charge GST on Rs 10,000/-( Even if this amount is more that Rs 7500). The moment Aggregate Annual Turnover of RWA exceeds Rs20 Lakh, it will take GST Registration and charge GST on amount of Rs 10,000/ at applicable rate.
Therefore together the understanding of Para (1) and Para (2) clarifies the GST exemption available on maintenance charges charged by RWA.
Entitlement to take ITC by RWA
GST Registered RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.
Readers are advised to consult the professional for understanding the applicability of this writeup in the respective scenarios. While due care has been taken in preparing this writeup, the existence of mistakes and omissions herein is not ruled out. No part of this writeup should be distributed or copied (except for personal, non-commercial use) without our written permission.